Poly(epsilon-caprolactone) (PCL) chains grafted onto montmorillonite modified by a mixture of nonfunctional ammonium salts and ammonium-bearing hydroxyl groups were prepared. The clay content was fixed to 3 wt %, whereas the hydroxyl functionality was 25, 50, 75, and 100%, obtaining an intercalated or exfoliated system. The transport properties of water and dichloromethane vapors and the mechanical properties were investigated. The mechanical and dynamic mechanical analyses showed improvement of the nanocomposite elastic modulus in a wide temperature range. Interestingly, for the higher hydroxyl contents (50, 75, and 100%), the decrease of modulus at higher temperature, due to the PCL crystalline melting, did not lead to the loss of mechanical consistence of the samples. Consequently, they revealed a measurable modulus up to 120 degreesC, a much higher temperature with respect to pure PCL. Water sorption was investigated in the entire activity range, and a lower sorption was observed on increasing the hydroxyl content, up to the sample with 100% hydroxyl content, which turned to be completely impermeable, even in liquid water. The sample with 75% hydroxyl content showed a threshold activity (a = 0.4) below which it was impermeable to water vapor. Also, the diffusion parameters decreased when the hydroxyl content increased, up to the 100% sample, which showed zero diffusion. The diffusion parameters of an organic vapor, dichloromethane, also exhibited a decreasing value on increasing the hydroxyl content in the nanocomposites. (C) 2004 Wiley Periodicals, Inc.